U.S. shipping rates start to cool

The cost of shipping within China and the United States has dropped following months of steep rises, as orders for year-end holidays quiet, and a power crunch in the world’s second-biggest economy interrupts the production of goods, new data displays.

Though prices are still far costlier than last year, shipping containers’ costs have dropped by higher than 51 percent on some routes within September and October, as stated by freight forwarding platform Shifl.

The spot rate for shipping a 40-foot container from China to Los Angeles has fallen from a high of US$17,500 last month to US$8,500, while rates to the east coast of the US have plunged 28.2 percent over the past month to US$14,000 by the container.

Rising container prices

The Freightos Baltic Index also registered shipping costs between Asia and both coasts of the US sank 16 percent last week, recording the first significant drop after August. Nevertheless, this week’s transpacific ocean rates continued essentially fixed.

Rising prices for containers and congestion at ports worldwide have driven shipping rates sky-high over the past year, creating significant headaches for Chinese exporters, who are also grappling with high raw material prices. Many smaller producers of low-value goods have begun 

cutting back on production and turning away orders to protect their margins.

Notwithstanding lowering shipping rates, transpacific freight costs are still about four times more expensive than the corresponding period last year and more than ten times higher than pre-epidemic levels, stated Judah Levine, head of research at Freightos.

Irregular distribution of containers at important ports worldwide because of epidemic-related lockdowns and port suspensions are behind the high costs. Following the middle of last year, most shipping containers sent from Asia to North America and Europe have not been delivered because of logistics disruptions and a shortage of goods to stock them.

The problem has been increased by critics who took advantage of the price hikes and obstruction by buying up capacity and are now attending to offload containers to book a healthy profit, stated Shabsie Levy, founder, and CEO of Shifl.

But a release has come in the form of China’s power crisis, which has produced products to fall among many small and medium-sized manufacturers.